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Tea Partyers, IRS spar over tax status

Conservatives say the agency is asking for too much documentation, but officials say they are just trying to weed out ineligible groups.

By MSN Money Partner Mar 1, 2012 5:46PM

This post is by Alan Fram of The Associated Press.


The Internal Revenue Service is embroiled in battles with Tea Party and other conservative groups who claim the government is purposely frustrating their attempts to gain tax-exempt status.


The fight features instances in which the IRS has asked for voluminous details about the groups' postings on social networking sites such as Twitter and Facebook, information on donors and key members' relatives, as well as copies of all literature they have distributed to their members, according to documents provided by some organizations.


While refusing to comment on specific cases, IRS officials said they are merely trying to gather enough information to decide whether groups qualify for the tax exemption. Most organizations are applying under section 501(c)(4) of the federal tax code, which grants tax-exempt status to certain groups as long as they are not primarily involved in activity that could influence an election, a determination that is up to the IRS.


The tax agency would seem a natural target for Tea Party groups, which espouse smaller and less intrusive government and lower taxes. Yet over the years, the IRS has periodically been accused of political vendettas by liberals and conservatives alike, usually without merit, tax experts say. (Post continues after video.)

The latest dispute comes early in an election year in which the IRS is under pressure to monitor tax-exempt groups – such as the Republican-leaning Crossroads GPS and Democratic-leaning Priorities USA -- which can shovel unlimited amounts of money to allies to influence campaigns, while not being required to disclose their donors.


Conservatives say dozens of groups around the country have recently had similar experiences with the IRS and claim that the agency's information demands are intrusive and politically motivated. They complain that the sheer size and detail of material the agency wants is designed to prevent them from achieving the tax designations they seek.


"It's intimidation," said Tom Zawistowski, the president of the Ohio Liberty Council, a coalition of Tea Party groups in the state. "'Stop doing what you're doing, or we'll make your life miserable.'"


Seeking volumes of details


Authorities on the laws governing tax-exempt organizations expressed surprise at some of the IRS requests, such as the volume of detail it is seeking and the identity of donors. But they said it is the agency's job to learn what it can to help decide whether tax-exempt status is warranted.


"These Tea Party groups, a lot of their material makes them look and sound like a political party," said Marcus S. Owens, a lawyer who advises tax-exempt organizations and who spent a decade heading the IRS division that oversees such groups. "I think the IRS is trying to get behind the rhetoric and figure out whether they are, at their core, a political party" or a group that would qualify for tax-exempt status.


While Tea Party members first came to the public's attnetion with their noisy opposition to President Barack Obama's health care overhaul at congressional town hall meetings in the summer of 2009, group leaders say they are chiefly educational organizations.


They say they mostly do things like invite guests to discuss issues and teach members about the Constitution and how to request government documents under the Freedom of Information Act. Some say they occasionally endorse candidates and seek to register voters.


"We're doing nothing more than what the average citizen does in getting involved," said Phil Rapp, executive director of the Richmond Tea Party in Virginia. "We're not supporting candidates; we are supporting what we see as the issues."


'Modern-day witch hunt'


One group, the Kentucky 9/12 Project, said it applied for tax-exempt status in December 2010. After getting a prompt IRS acknowledgement of its application, the organization heard nothing until it got an IRS letter two weeks ago requesting more information, said the project's director, Eric Wilson.


That letter, which Wilson provided to The AP, asked 30 questions, many with multiple parts, and gave the group until March 6 to respond.


Information requested included "details regarding all of your activity on Facebook and Twitter" and whether top officials' relatives serve in other organizations or plan to run for elective office. The IRS also sought the political affiliation of every person who has provided the group with educational services and minutes of every board meeting "since your creation."


"This is a modern-day witch hunt," said Wilson, whose 9/12 group and others around the country were inspired by conservative activist Glenn Beck.


Other conservative organizations described similar experiences.


Status restricts political activities


A January IRS letter to the Richmond Tea Party requests the names of donors, the amounts each contributed and details on how the funds were used. The Ohio Liberty Council received an IRS letter last month seeking the credentials of speakers at the group's public events. In a February letter, the IRS asked the Waco Tea Party of Texas whether its officials have a "close relationship" with any candidates for office or political parties, and also asked about any events the group plans this year.


"The crystal ball I was issued can't predict the future," and those events will depend on factors like what Congress does this year, said Toby Marie Walker, the president of the Waco group.


The IRS provided a five-paragraph written response to a reporter's questions about its actions. It noted that the tax code allows tax-exempt status to "social welfare" groups, which are supposed to promote the common good of the community.


Groups can engage in some political activities "so long as, in the aggregate, these non-exempt activities are not its primary activities," the IRS said.


"Career civil servants make all decisions on exemption applications in a fair, impartial manner and do so without regard to political affiliation or ideology," the agency said.


There were 139,000 groups in the United States with 501(c)(4) tax-exempt status in 2010, the latest year of available IRS data. More than 1,700 organizations applied for that designation in 2010, and more than 1,400 were approved. Such volume means it might take months for the IRS to assign applications to agents, said Lloyd Hitoshi Mayer, a Notre Dame law professor who specializes in election and tax law.


Ever since a 2010 Supreme Court decision allowing outside groups to spend unlimited funds in elections, such organizations have been under scrutiny.


Two nonpartisan campaign finance watchdogs called on the IRS last fall to strip some large groups of tax-exempt status, claiming they engage in so much political activity that they don't qualify for the designation.


Last month, seven Democratic senators asked the IRS to investigate whether some groups were improperly using tax-exempt status -- they didn't name any organizations -- because they are "improperly engaged in a substantial or even a predominant amount of campaign activity."


Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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Mar 1, 2012 10:04PM
It should be totally obvious to anyone these Tea Party groups don't qualify for tax exempt status. They are political organizations.
Mar 2, 2012 3:53AM
I despise our government, but the Tea Party organizations were and are political groups trying to influence elections. That was and still is their primary purpose. Everybody knows it. Why deny it? 

I just find it funny that a "grass-roots" organization that is mostly against obscene taxation and government ascendancy is trying to avoid that taxation because they want to be an organized group within the system that they believe is corrupt and domineering. You can't have it both ways - even if the system is corrupt and needs to be reformed (or abolished). 
Mar 4, 2012 10:19PM
What do you want to bet this didn't happen to ACORN?
Mar 7, 2012 12:31AM

Tea baggers scream about socialism then cry "leave my social security and medicare care alone." Then they vote for republicans who actually tell everyone they want to destroy both programs by privatizing them. How's that working for ya! Why not just drive around and throw your money out the window.You people are so funny. Acorn scandel turned out to be a total lie, check the real news, everyone knows that but addmyself person.

Mar 2, 2012 4:59PM

Have they done an investigation into the political activities of the many organizations directly involved in promoting specific elected politicians, i.e.,  I have heard and read some horror stories of these political groups and they have non tax status.


i know for a fact that the Patriot/Tea Party groups, of which i belong, specifically support no individual candidate.  Our involvement is in U.S. Constitution education, discussion of Bills before the President and  Congress, Candidate speakers at the meetings,


Of course I also read and hear much mis-informantion about what we do.

Mar 2, 2012 9:19AM

"We're doing nothing more than what the average citizen does in getting involved," said Phil Rapp, executive director of the Richmond Tea Party in Virginia. "We're not supporting candidates; we are supporting what we see as the issues."

You'd have to be stupid to believe that, but...if you do what the average citizen does, you also deserve the same tax rate. You're taxable, bonehead.

Mar 2, 2012 2:52AM
I thought the Tea Party was a terrorist group...
Mar 2, 2012 9:27AM
Have tea baggers ever had an original thought?
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